There's something undeniably appealing about the idea of living an expatriate adventure in retirement. Striking out for foreign shores can seem pragmatic as well as poetic.

"Most people envision a twofold advantage: the romance of experiencing a different culture and the notion that they can get more bang for their buck living abroad," says Bill Hunter, director in the Personal Retirement Solutions Group at Merrill Lynch. "And countries like Mexico, Costa Rica and Panama — popular destinations for retirees seeking warmer climates and lower costs — may offer both."

But relocating to another country isn't easy. You'll need to consider a range of factors, from your destination country's political stability to the logistics of managing your assets from afar. Hunter urges retirees to plan carefully and consider the following questions before packing their passports.

Is your family on board?

The migration of a close family member across the globe can change the family dynamics, whether between children and parents or within couples. Understand the impact your move will have on close relationships — especially the one you have with your partner.

"Make sure your spouse is as invested in the idea as you are," Hunter says. "That way, when unexpected issues arise — and they will, no matter how carefully you plan — you won't have the added complications of resentment and blame."

How will you handle health care needs?

Access to quality health care is paramount in retirement, so be sure to understand the relative cost and quality of care in the country where you hope to retire. "While many countries can offer health care that's as good as, if not better than, what you get in the U.S., that can vary by city or region, and even by type of care," warns Hunter, who suggests researching the physicians and facilities in your potential destination and planning accordingly. "Make sure quality remains on par with what's available in the U.S. even for more complex procedures — and if it doesn't, budget for the possibility that you may need to travel back home for certain medical procedures."

Given that Medicare doesn't cover health services outside the U.S., you may want to look into private health insurance — often less expensive overseas — or seek out a country such as Mexico, which allows those holding permanent residence visas to buy into its national health plan. Some retirees plan to live in another country for the early years of the retirement and then come back to the U.S. for the later years. But keep in mind that if you return home and sign up for Medicare, your premium will be 10% higher for each 12-month period you could have been enrolled but were not.

Are you looking for a tax advantage?

If lower taxes factor into your decision, think again. The IRS taxes U.S. citizens on income no matter where they live. In fact, even if you relinquish your citizenship (which few retirees do), you'll owe income tax as a nonresident alien. The U.S. also has laws to collect income tax from retirees who move their assets to a foreign country. The good news? Many countries, such as Canada and Mexico, have tax treaties with the U.S. that prevent double taxation.

How does the cost of living really compare?

You may be able to buy a beachfront home in Mexico for far less than what you would pay in the U.S., but you need to consider your entire budget. For example, relocation costs — whether moving your belongings or furnishing a home from scratch — may be higher than if you moved somewhere domestically. And the costs of groceries, heat, electricity, cellphone service and transportation may not cost less than what you're now spending, and could possibly be more.

Will you be able to work?

Although many of today's retirees hope to work during their retirement, living in a foreign country may make employment more complicated. "If that's part of your vision, consider the job prospects for folks with your experience in your destination country — and whether you will be allowed to work as a U.S. citizen abroad," Hunter suggests.

It's also worth looking into the professional culture of the location you're considering moving to. Be prepared for a potentially lengthy adjustment period, which could affect your income.

How will you manage your assets?

Because finances can usually be managed from afar with relative ease, expat retirees can keep their assets in the U.S., where the economy and political situation are relatively stable. "But you'll also want a local account to avoid currency exchange fees and ATM withdrawal charges," Hunter says.

Depending on your destination, you may also want to find out how you can proactively address cash flow issues — like having your account automatically frozen when you repeatedly access your credit card from a remote location.

"Talk to your Merrill Lynch financial advisor about how to hedge against exchange-rate fluctuations by setting up a local account and making regular transfers from your U.S. account to cover everyday expenses," Hunter adds. It's also a good idea to know whether these transfers might incur their own fees, and to ensure that legal documents — trusts, wills and powers of attorney — will be enforceable in your destination country.

When moving assets abroad or acquiring new investments in another country, consult a lawyer to determine whether those assets will be subject to local estate tax rules.

Can you adjust?

After the fantasy of living abroad becomes reality, some expats find themselves feeling isolated, particularly when they don't speak the local language. Consider whether you might want to live somewhere with a vibrant expatriate community. Also keep in mind that the amount of English spoken in various countries may vary from region to region, or even from neighborhood to neighborhood.

Hunter suggests spending a few months in a potential destination before making a permanent move. "You'll get a sense of life there and have the chance to scope out the housing situation and whether you'll be able to build a network," he says.

How will you connect with family and friends?

Lengthy plane rides can grow more difficult as you age. E-mail and video services make it easier to stay in touch with family members and friends back in the U.S., but if you want to see them regularly in person, choose a destination that will enable you and the people you care about to travel back and forth easily and affordably.

"There's a lot of appeal to the idea of leaving the culture you grew up in and starting a brand-new life," Hunter says. "But retiring abroad adds a layer of complexity to virtually every aspect of retirement planning. So make sure you do your homework and make the decision with your eyes wide open."